Btl - R.i.p

[Turion]

OK that is true. With a 30% correction you can sell everything at the price you paid for it (because when you started 4 years ago prices were around 30% less than they are today). You can then retire? not from the money from BTL then surely, given the above. Well I presume you must have other capital to allow you to retire.

Now what happens if prices drop by 50%, which is quite likely. Then you have lost an additional 20% on 8 * £150K (say) = £240K. So this will take a big chunk out of your retirement fund.

rather you than me.

Agree with this. He is highy leveraged and hence very vunerable to a wipe out. Even a small 20% correction will see him in negative equity with no chance of re-mortaging in 3 yrs time without injecting significant equity. Where will this money come from? From his savings/retirement funds probably or a fire sale of assets if things get desperate. These amateur landlords have their heads in the sand. Wouldn't want to be in his shoes.

[KentPhilip]

philip get in the real world.....

Im sitting on a very large equity and I can tell you that remove 30% I can still retire.

You have no idea what my break down is, my equity, or even total portfolio value....If say I am sitting on £2m equity then take 30% away yes I can still retire thanks.....

not that I am of course but u get my point, I could have £20m....so dont speculate

I'm going on what you have said in your posts - obviously I know nothing about your finances outside of that.
You said you have been in the BTL game for 4 years, and you have bought 8 properties. And I think we can agree that these have risen by around 30% in the past 4 years or so (maybe a bit more for London). So the equity you have in the properties cannot be more than this 30%. (unless you count your original deposits, but that really is savings - you would have had that in any case).
So if property goes down 30% then you are back to prices from 4 years ago, and your equity is zilch.

[neilawuk]

ok let me answer....

the fact I have many properties means the profit from others offset voids. If all of them sat empty of course it would cost me but money built up in previous yields would cover some of it.

insurance is covered as part of the service charge on most, the houses have buildings landlord insurance which covers me for trashing the place.

My mortgages are a mix of fixed and discount. If the rates go up on one then I could be break even or worse off but the fixed balance the risk and remember rentals go up with inflation....

You guys do what ya like, this thread started saying BTL is dead, it isnt and I have proved it....pickking apart any business model will illustrate some element of risk, so dont really get your point? are you looking for a dead cert, cos guess what, there isnt one.

[neilawuk]

totally disagree about 30% in 4 years......I have seen 25% in one year for some as I have properties nationwide....you cant make assumptions like that....

but.....if I was put back to pure deposit status then thats a very nice nest egg which I could retire on, remember you dont know hoe much money I initially put in and what my portfolio is worth....

[KentPhilip]

I cant actually think u think a 50% drop is likely.....

The BTL boom is an investment bubble. All bubbles burst (dot com, tulips (that was a tulip investment), south sea)
UK property is around 30% overvalued, and when it crashes it will overshoot by around 20% or so.
50%.

[KentPhilip]

totally disagree about 30% in 4 years......I have seen 25% in one year for some as I have properties nationwide....you cant make assumptions like that....

but.....if I was put back to pure deposit status then thats a very nice nest egg which I could retire on, remember you dont know hoe much money I initially put in and what my portfolio is worth....

I think the UK property market as a whole has risen by around 30% in 4 years. Of course had you bought in Sandbanks or been otherwise a very canny selector of property then you might have done much better. But there's nothing to indicate from your posts that this is the case.

[neilawuk]

dya know what, i hope they do drop 50% I will be the first one in the queue at the estate agents buying blocks of the buggers!!! waiting 5 years then remortgaging the entire lot....hmmmm now what kind of wood did I want in that yacht...

[KentPhilip]

ok let me answer....

the fact I have many properties means the profit from others offset voids. If all of them sat empty of course it would cost me but money built up in previous yields would cover some of it.

insurance is covered as part of the service charge on most, the houses have buildings landlord insurance which covers me for trashing the place.

My mortgages are a mix of fixed and discount. If the rates go up on one then I could be break even or worse off but the fixed balance the risk and remember rentals go up with inflation....

You guys do what ya like, this thread started saying BTL is dead, it isnt and I have proved it....pickking apart any business model will illustrate some element of risk, so dont really get your point? are you looking for a dead cert, cos guess what, there isnt one.

Do you mean profit or capital gain? Only the former can cover for voids (unless you sell and realise the gain). And as 80% or thereabouts of income goes to pay the mortgage there is not much profit I would say.

I think you should have sold 6 months ago with a huge capital gain, and invested in oil or something. Or even just kept the money in the bank as I have. Then in a few years with 30% off you could buy much more for your money.

Anyway nice chat, and it sounds like you're loaded anyway (a guess) so I think its all a game to you. Life's a game is it not?

[KentPhilip]

dya know what, i hope they do drop 50% I will be the first one in the queue at the estate agents buying blocks of the buggers!!! waiting 5 years then remortgaging the entire lot....hmmmm now what kind of wood did I want in that yacht...

That is my game-plan too. Wait for the drop and buy in as a cash buyer.

Check out the housepricecrash forum at:http://www.housepricecrash.co.uk/forum

You would be a "bull" as opposed to a "bear", and I can assure you of lively debate should you stick your head over that parapet

[vetran]

OK

BTL equation is

profit = Money in + mortgage payments + cost of administering < value of property + value of income.


So long as its positive you are OK